As a society, we think of our jobs as something we must do to make money so we can buy stuff, pay our bills, and maybe even have a little left over for savings. We think in terms of how much our employer pays us, whether it’s an annual salary or hourly wage. We’re told working is a necessary part of life, but how much do we spend just to go to work in the first place?
When I tallied up our 2014 expenses for Getting Our Spending Under Control, I was a little shocked at how high they were. After all, we’re naturally frugal and rarely buy any “stuff” beyond the necessities.
While examining our expenses more closely, I noticed many were fairly typical items like food, housing, utilities, and insurance as well as several one-time costs related to our new house and wasn’t too concerned about those (although they can be reduced as well). Others, however, were more concerning as I realized they were directly attributable to maintaining full time employment.
Being a numbers guy, I decided to approximate how much it cost our family to go to work in 2014. This turned out not only to be an interesting exercise, but also helped build our case for ditching the daily grind. I mixed in a few assumptions with our actual costs to get a fairly reasonable estimate. Our costs attributed to working a traditional job are broken down below.
– $16,744 (actual cost)
Fuel for cars
– Combined 70 mile roundtrip per day x 245 days/yr = 17,150 miles/yr commute
– Vehicles averaged 23 miles/gallon
– 17,150 miles/(23 miles/gallon) = 745.65 gallons of gas
– Assume gas costs $2.50 – $3.00/gallon
– 745.65 x 2.5 = $1,864
– 745.65 x 3 = $2,237
– Approx. = $2,000
Auto Registration and Insurance on second vehicle
– Assume a second vehicle would not be needed if both Mrs. DTG and I were not working
– Assume auto maintenance is cut in half due to not needing second vehicle and driving less
– $1,078/2 = $539 (half of actual 2014 cost)
Larger house (specific to our current live-in nanny situation)
– Assume we would have purchased a smaller, less expensive house without a sixth person living here resulting in a 15% decrease in housing costs
– $12,918 (actual mortgage interest, property taxes, insurance) x 0.15 = $1,938
– Assume 15% decrease in gas/electric
– $2,358 (actual costs) x 0.15 = $354
– Assume 5% decrease in water/trash/recycling due to less water usage
– $1,067 (actual costs) x 0.05 = $53
Corporate Costumes (work clothes)
Random “Mandatory” Office Lunches/Donations/Gifts
– Assume $25/mo per person
– $25 x 12 = $300
– 16,744 + 2,000 + 500 + 539 + 1,938 + 354 + 53 + 500 + 300 = $22,928/yr
Based on this analysis, we spent nearly $23,000 last year just for the privilege of showing up to work! This doesn’t even include the $1,000 additional cost on a vacation rental in Colorado during the peak season (early retirees can take advantage of off-season rates; we went during Christmas week, the only time Mrs. DTG was able to take off from work/school) or $6,000 in car payments (car is now paid off, was financed for 3 years at 0.9%), which would’ve brought the total to $30,000!!!
Not sure about you, but I can find a lot of better uses for that money. When thinking about how much your job pays, you also need to consider the hidden costs of working. This simple example illustrates one way your expenses could drop drastically in early retirement. How much are you paying to work?